Cannabis commission closing in on critical test lab licensing

Thursday

State regulators are preparing to put one of the most significant roadblocks to the rollout of the non-medical marijuana industry in the rearview mirror later this month.

The Cannabis Control Commission could license the first independent testing laboratory at its next meeting, the agency's executive director said Thursday, an approval that could clear the way for already licensed marijuana retailers to begin selling to non-medical patients.

The CCC has 95 completed applications awaiting its review, Executive Director Shawn Collins said Thursday, including applications from two independent testing labs. Collins said he is "relatively confident" the commission will be asked to consider at least one of those applications when it meets next, in two weeks.

"We're actively engaged with each application. If additional information is necessary or if clarification may be necessary, we will engage in that conversation with the applicants. That's kind of where they stand as of now," Collins said. "That review is, of course, a priority so I'm relatively confident that hopefully at our next meeting I will be able to bring one, if not both, of those applications to the commission for consideration."

The CCC previously agreed to expedite its review of testing lab applications because all non-medical marijuana sold in Massachusetts must first be tested and approved by a lab. The CCC has given provisional licenses to a handful of retail stores, but those licensees cannot sell anything until it has been tested and approved.

Of the 95 completed applications submitted to the CCC, Collins said 20 have not yet been reviewed by the CCC staff, 38 were reviewed and determined to be incomplete, 18 have been sent out for background checks and cross-checks with the host municipality, seven were on the CCC's agenda for consideration Thursday and the CCC had already acted on 12 applications before Thursday's meeting.

The CCC had hoped to launch legal non-medical marijuana sales by July 1 but has since refused to put a timeline on the rollout of an industry that voters approved at the ballot in 2016. It has been legal for adults 21 or older to grow and consume marijuana since December 2016.

On Thursday, the CCC unanimously approved seven more license applications, bringing its total number of provisional licenses issued to 19.

Regulators OK'ed three applications from M3 Ventures, Inc., a company that operates medical marijuana dispensaries in Mashpee and Plymouth. Formerly known as Medical Marijuana of Massachusetts, M3 Ventures was granted a provisional license to grow between 5,001 and 10,000 square feet of marijuana indoors, to manufacture marijuana products and to operate a retail shop in Plymouth.

The commission was also unanimous in its approval of three applications from I.N.S.A., Inc., which currently operates dispensaries in Easthampton and Springfield. I.N.S.A was granted provisional licenses to grow between 50,001 and 60,000 square feet of marijuana indoors, to manufacture marijuana products and to open a retail shop in Easthampton.

And an application from Pharmacannis Massachusetts, Inc., to open a retail shop in Wareham was also approved by the CCC on Thursday. Pharmacannis Massachusetts sometimes goes by the name Verilife and already operates a medical dispensary in Wareham, according to the Department of Public Health.

Also Thursday, the CCC discussed the 36 responses it received in response to a draft guidance document it issued two weeks ago related to the agreements marijuana businesses are required to enter into with their host municipalities.

State law calls for communities to enter into host community agreements with marijuana licensees and stipulates that those agreements cannot run for more than five years and that the community impact fee paid to the municipality by the licensee cannot exceed 3 percent of the establishment's gross sales.

Because the CCC will not consider a license application until a host community agreement has been executed, marijuana entrepreneurs and advocates have complained that municipal officials use the agreements to secure contributions above and beyond the 3 percent cap from prospective marijuana businesses. The law states the fees "shall be reasonably related to the costs imposed upon the municipality" by the marijuana business.

The draft guidance issued two weeks ago, as Commissioner Britte McBride put it, spelled out that the CCC considers fees "that compensate a municipality for its actual and anticipated expenses resulting from the operation of the marijuana establishment" as fitting the reasonably related standard.

On Thursday, Commissioner Shaleen Title proposed that the CCC include a review of host community agreements as part of its licensing process. Her proposal was to have the CCC limit its review of the agreements to ensuring that the community impact fee is reasonably related to the costs imposed upon the municipality by the operation of the marijuana business, no more than 3 percent of the business's gross sales, and is limited to a term of five years.

A lengthy debate ensued over the legal authority for the CCC to review host community agreements and to require changes in agreements to which they are not a party. Commissioners settled on the notion that they have the legal authority to review host community agreements as part of the inspection required before a provisional license becomes an official one, but not as part of the CCC's license application process.

There was broad agreement that the CCC's only course of action in the event that it reviews a host community agreement and finds it does not conform to the law would be to deny the application. Commissioners agreed that the CCC does not have the legal authority to require changes to the agreements.

Ultimately, the CCC agreed to greenlight the issuance of the municipal guidance document with a few edits made during Thursday's meeting and asked Collins to come up with a plan by the next CCC meeting to have the agency's staff incorporate a review of host community agreements into its final licensure inspection process.

Commissioner Kay Doyle asked that the CCC return to the topic at its meeting on Sept. 6 so that responses from a survey of municipalities can be taken into account, but CCC Chairman Steven Hoffman pressed for Collins to present something on Aug. 23, noting that it is an issue that has potential to hold up the issuance of the first final license and therefore the start of legal retail marijuana sales.

"I'm going to be really, really careful because I do not want to see this on the front page of the paper about exactly when a final license is going to be issued because I am not making a forecast about that," Hoffman said, "but we have to get this resolved before a final license gets issued."